The paper deals with the deterioration of human capital during spells of unemployment. In our model the probability of … leaving the unemployment pool decreases with the duration of unemployment. It can be shown that with a linear deterioration … function and a simple distribution function for the reservation productivity of firms, unemployment duration is suitably …

This paper explores the evidence for positive hysteresis in the labor market. Using data from the National Longitudinal … Surveys of Youth, we find that negative labor market outcomes during high-unemployment periods are mitigated by exposure to a …